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By Tanvi Loond
A Limited Liability Partnership (LLP) is a hybrid business structure that combines the best
aspects of a Partnership and a Company.
The LLP Bill, 2006 was introduced in the Rajya Sabha on December 15, 2006 to combine
the tax status of a partnership structure with the advantage of limited liability for its
partners.
Limited Liability
Partners are liable to the extent of their contribution to the firm. Unlike a partnership firm, Big Change:
The end of Five-Year Plans: All you need to know
partners in an LLP are not liable to the outside creditors.
Ease of running the business
The formation and running of an LLP requires lesser compliances when compared to the formation and running of a Company
Membership
The following can be partners in an LLP:
Individuals
Limited Liability Partnerships
Foreign Limited Liability Partnerships
Companies
Foreign Companies
Incorporation of an LLP
Limited Liability Partnership Act 2008 (the Act) is the governing Act for incorporation of an LLP. The Act mandates a minimum of two
partners to create an LLP but there is no limit regarding the maximum number of partners. In this article, we throw light on the steps to
be followed while incorporating an LLP.
Step 1: Application for Digital signature Certificate and Designated Partner Identification Number
Every individual who is intending to be appointed as designated partner of an LLP shall make an application for a Digital Signature
Certificate (DSC). A DSC is mandatory to digitally sign all forms to be filed electronically on the MCA portal. A DSC can only be obtained
from government recognized Certifying Agencies.
Once the DSC is obtained, the partners shall make an application in Form DIR-3 for obtaining Designated Partner Identification Number
(DPIN). This is mandatory in order to be appointed as designated partner under the Act. While filing Form DIR-3 the applicant must
attach a proof of identity along with a proof of residence.
Once a name is approved, the applicant can apply for incorporation of the LLP, before expiry of the validity of approved name, that is,
three months from the date of approval. Form RUN-LLP has to be filed with a fee of Rs 200.
Form FiLLiP has to be filed with the following fee along with the applicable Stamp Duty
Step 4: Certificate of Incorporation
Upon successful registration of the LLP, the RoC shall issue a Certificate of Incorporation in Form 16 under the seal of the Registrar.
This certificate contains the LLP Identification Number (LLPIN)
Form 3 has to be filed with the following fee along with the applicable Stamp Duty
In case no agreement has been executed, the relationship between the partners and the partners and the LLP will be governed by the
First Schedule of the Act.
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